Key Takeaways
- • Genesis Global Capital, a major crypto lending firm owned by Digital Currency Group (DCG), filed for U.S. bankruptcy protection owing creditors at least $3.4 billion, according to Reuters, and plans to exit bankruptcy by May 19.
- • Genesis froze client withdrawals in its lending unit in November 2022, citing "extreme market dislocation and loss of industry confidence" after the collapse of FTX.
- • Genesis's two largest borrowers were Three Arrows Capital, which went bankrupt in July 2022, and Sam Bankman-Fried's Alameda Research, which is also in bankruptcy proceedings.
- • Gemini co-founder Cameron Winklevoss publicly demanded that the DCG board remove founder and CEO Barry Silbert, and Gemini says Genesis owes it $900 million.
- • Silbert, a former investment banker who founded DCG in 2015, had a long track record in private-market trading through SecondMarket, and Forbes valued his net worth at $3.2 billion last year.
Summary
Genesis Global Capital, one of the world's largest crypto lending firms, filed for U.S. bankruptcy protection on a Thursday, owing creditors at least $3.4 billion, according to Reuters. Filings made public on Friday showed the firm plans to exit bankruptcy by May 19. The filing is the latest in a string of major failures in the digital asset industry triggered by the 2022 collapse in crypto prices. Genesis, which brokers crypto for institutions including hedge funds and asset managers, had frozen client withdrawals in its lending unit in November, citing "extreme market dislocation and loss of industry confidence" after the downfall of FTX.
Reuters reported earlier this month that Genesis's two biggest borrowers were Three Arrows Capital, the Singapore hedge fund that went bankrupt in July, and Alameda Research, the hedge fund of FTX founder Sam Bankman-Fried, which is also in bankruptcy proceedings. Genesis is wholly intertwined with Digital Currency Group (DCG), the venture firm founded by Barry Silbert, which is Genesis's parent. DCG did not immediately respond to a request for comment.
Silbert, 46, previously worked as an investment banker at Houlihan Lokey, where he worked on bankruptcies including those of Enron and WorldCom. He founded Restricted Stock Partners in 2004, which became SecondMarket and by 2011 had facilitated billions of dollars in private-market transactions, according to Forbes. Nasdaq acquired SecondMarket in 2015 for an undisclosed sum, and Silbert relaunched its crypto trading division as Genesis Trading that same year. He founded DCG in New York in 2015. Reuters reported that Silbert bought about $175,000 of bitcoin in 2012 at roughly $11 a coin. Forbes pegged his net worth at $3.2 billion last year, though Reuters noted the current figure is unclear.
DCG has raised money from Bain Capital Ventures, Mastercard, New York Life Insurance and CIBC, according to Reuters, and says it has invested in more than 200 companies across more than 35 countries, including Genesis, CoinDesk, and Grayscale Investments. Silbert has also said DCG has invested in more than 50 crypto funds and related projects.
Silbert has faced criticism since Genesis suspended withdrawals. Gemini, the crypto exchange, says it offered a crypto yield product in partnership with Genesis and that Genesis owes it $900 million. In an open letter posted to Twitter on January 10, Cameron Winklevoss, Gemini's co-founder, accused Silbert of misleading investors and of engaging in bad-faith stall tactics, and demanded that the DCG board remove him as CEO. Genesis declined to comment. A spokesperson earlier this month said Gemini was "waging a public media campaign despite ongoing productive private dialogue between the parties." In a shareholder letter also dated January 10, Silbert described the past year as the most difficult of his life and said his integrity and intentions had been questioned.
Reuters reported earlier this month that Genesis's two biggest borrowers were Three Arrows Capital, the Singapore hedge fund that went bankrupt in July, and Alameda Research, the hedge fund of FTX founder Sam Bankman-Fried, which is also in bankruptcy proceedings. Genesis is wholly intertwined with Digital Currency Group (DCG), the venture firm founded by Barry Silbert, which is Genesis's parent. DCG did not immediately respond to a request for comment.
Silbert, 46, previously worked as an investment banker at Houlihan Lokey, where he worked on bankruptcies including those of Enron and WorldCom. He founded Restricted Stock Partners in 2004, which became SecondMarket and by 2011 had facilitated billions of dollars in private-market transactions, according to Forbes. Nasdaq acquired SecondMarket in 2015 for an undisclosed sum, and Silbert relaunched its crypto trading division as Genesis Trading that same year. He founded DCG in New York in 2015. Reuters reported that Silbert bought about $175,000 of bitcoin in 2012 at roughly $11 a coin. Forbes pegged his net worth at $3.2 billion last year, though Reuters noted the current figure is unclear.
DCG has raised money from Bain Capital Ventures, Mastercard, New York Life Insurance and CIBC, according to Reuters, and says it has invested in more than 200 companies across more than 35 countries, including Genesis, CoinDesk, and Grayscale Investments. Silbert has also said DCG has invested in more than 50 crypto funds and related projects.
Silbert has faced criticism since Genesis suspended withdrawals. Gemini, the crypto exchange, says it offered a crypto yield product in partnership with Genesis and that Genesis owes it $900 million. In an open letter posted to Twitter on January 10, Cameron Winklevoss, Gemini's co-founder, accused Silbert of misleading investors and of engaging in bad-faith stall tactics, and demanded that the DCG board remove him as CEO. Genesis declined to comment. A spokesperson earlier this month said Gemini was "waging a public media campaign despite ongoing productive private dialogue between the parties." In a shareholder letter also dated January 10, Silbert described the past year as the most difficult of his life and said his integrity and intentions had been questioned.
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